Correlation Between Walker Dunlop and New Wave
Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and New Wave at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Walker Dunlop and New Wave into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walker Dunlop and New Wave Holdings, you can compare the effects of market volatilities on Walker Dunlop and New Wave and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Walker Dunlop with a short position of New Wave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and New Wave.
Diversification Opportunities for Walker Dunlop and New Wave
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Walker and New is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and New Wave Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Wave Holdings and Walker Dunlop is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Walker Dunlop are associated (or correlated) with New Wave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Wave Holdings has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and New Wave go up and down completely randomly.
Pair Corralation between Walker Dunlop and New Wave
Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 45.33 times less return on investment than New Wave. But when comparing it to its historical volatility, Walker Dunlop is 23.71 times less risky than New Wave. It trades about 0.04 of its potential returns per unit of risk. New Wave Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1.84 in New Wave Holdings on August 26, 2024 and sell it today you would lose (0.63) from holding New Wave Holdings or give up 34.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walker Dunlop vs. New Wave Holdings
Performance |
| Timeline |
| Walker Dunlop |
| New Wave Holdings |
Walker Dunlop and New Wave Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walker Dunlop and New Wave
The main advantage of trading using opposite Walker Dunlop and New Wave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop position performs unexpectedly, New Wave can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in New Wave will offset losses from the drop in New Wave's long position.| Walker Dunlop vs. Mr Cooper Group | Walker Dunlop vs. Velocity Financial Llc | Walker Dunlop vs. Security National Financial | Walker Dunlop vs. Encore Capital Group |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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